Match List-I with List-II

Choose the correct answer from the options given below:

(A)-(IV), (B)-(III), (C)-(II), (D)-(I)

The correct answer is Option (1) → (A)-(IV), (B)-(III), (C)-(II), (D)-(I)

(A) Effective demand → (IV) Aggregate demand at equilibrium level
Effective demand refers to the aggregate demand corresponding to the equilibrium level of employment, where aggregate demand equals aggregate supply.

(B) Say’s law of markets → (III) Supply creates its own demand
Say’s Law states that production (supply) automatically generates an equal amount of demand, implying no general overproduction or unemployment.

(C) Inflationary gap → (II) Aggregate demand exceeds aggregate supply at full employment
An inflationary gap arises when aggregate demand is greater than aggregate supply at full employment, leading to rising prices.

(D) Aggregate supply → (I) National Income
Aggregate supply represents the money value of total goods and services produced in an economy, which is equivalent to national income.